XML 106 R25.htm IDEA: XBRL DOCUMENT
v3.19.3

Share-Based Compensation | 9 Months Ended
--- | ---
Sep. 30, 2019
Share-based Payment Arrangement [Abstract] |
Share-Based Compensation | Share-Based Compensation The Company typically grants equity awards annually at its regularly scheduled first quarter meeting of the Board of Directors based on their recommendation from the Compensation Committee. Stock Options Stock options generally vest ratably over four years. Weighted average option fair values and assumptions for the periods specified are disclosed below. The fair value of each option grant was estimated on the date of the grant using the Binomial lattice option pricing model.
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Weighted average fair value of grants | $27.72 |  | $40.83 |  | $35.15 |  | $38.14
Dividend yield | 1.27% |  | 1.14% |  | 1.18% |  | 1.07%
Volatility | 22.33% |  | 27.81% |  | 24.78% |  | 28.47%
Risk-free interest rate | 1.75% - 1.77% |  | 2.47% - 3.07% |  | 2.53% - 3.04% |  | 2.02% - 3.17%
Expected life (in years) | 4.65 |  | 5.81 |  | 5.87 |  | 5.83
Total compensation cost for stock options is as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Cost of goods sold | $ | 74 |  |  | $ | 91 |  |  | $ | 356 |  |  | $ | 388 |
Selling, general and administrative expenses | 2,137 |  |  | 1,929 |  |  | 6,663 |  |  | 6,334 |
Total expense before income taxes | 2,211 |  |  | 2,020 |  |  | 7,019 |  |  | 6,722 |
Income tax benefit | (288 | ) |  | (385 | ) |  | (940 | ) |  | (1,219 | )
Total expense after income taxes | $ | 1,923 |  |  | $ | 1,635 |  |  | $ | 6,079 |  |  | $ | 5,503 |
A summary of the Company’s stock option activity as of September 30, 2019 and changes during the nine months ended September 30, 2019 are presented in the following table:
Stock Options | Shares |  | Weighted Average Price |  | Weighted-Average Remaining Contractual Term |  | Aggregate Intrinsic Value
Outstanding at January 1, 2019 | 1,714,003 |  |  | $ | 85.08 |  |  | 6.70 |  | $ | 74,191,783 |
Granted | 335,095 |  |  | 144.91 |  |  |  |  |
Exercised | (513,317 | ) |  | 69.34 |  |  |  |  |
Forfeited | (90,067 | ) |  | 114.85 |  |  |  |  |
Outstanding at September 30, 2019 | 1,445,714 |  |  | $ | 102.69 |  |  | 7.13 |  | $ | 88,375,713 |
Vested and expected to vest as of September 30, 2019 | 1,346,871 |  |  | $ | 100.97 |  |  | 7.04 |  | $ | 84,725,335 |
Exercisable at September 30, 2019 | 649,766 |  |  | $ | 78.22 |  |  | 5.69 |  | $ | 55,657,413 |
Restricted Stock Restricted stock awards generally cliff vest after three years for employees and non-employee directors. Unvested restricted stock carries dividend and voting rights and the sale of the shares is restricted prior to the date of vesting. A summary of the Company’s restricted stock activity as of September 30, 2019 and changes during the nine months ended September 30, 2019 are presented as follows:
Restricted Stock | Shares |  | Weighted-Average Grant Date Fair Value
Unvested at January 1, 2019 | 148,041 |  |  | $ | 101.50 |
Granted | 41,780 |  |  | 143.13 |
Vested | (50,892 | ) |  | 80.51 |
Forfeited | (12,390 | ) |  | 122.52 |
Unvested at September 30, 2019 | 126,539 |  |  | $ | 122.69 |
Dividends are paid on restricted stock awards whose fair value is equal to the market price of the Company’s stock at the date of the grant. Total compensation cost for restricted shares is as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Cost of goods sold | $ | (10 | ) |  | $ | 77 |  |  | $ | 192 |  |  | $ | 316 |
Selling, general and administrative expenses | 1,094 |  |  | 902 |  |  | 3,419 |  |  | 3,155 |
Total expense before income taxes | 1,084 |  |  | 979 |  |  | 3,611 |  |  | 3,471 |
Income tax benefit | (204 | ) |  | (177 | ) |  | (684 | ) |  | (620 | )
Total expense after income taxes | $ | 880 |  |  | $ | 802 |  |  | $ | 2,927 |  |  | $ | 2,851 |
Cash-Settled Restricted Stock The Company also maintains a cash-settled share based compensation plan for certain employees. Cash-settled restricted stock awards generally cliff vest after three years. Cash-settled restricted stock awards are recorded at fair value on a quarterly basis using the market price of the Company’s stock on the last day of the quarter. A summary of the Company’s unvested cash-settled restricted stock activity as of September 30, 2019 and changes during the nine months ended September 30, 2019 are presented in the following table:
Cash-Settled Restricted Stock | Shares |  | Weighted-Average Fair Value
Unvested at January 1, 2019 | 88,225 |  |  | $ | 126.26 |
Granted | 25,950 |  |  | 143.14 |
Vested | (28,150 | ) |  | 144.27 |
Forfeited | (9,040 | ) |  | 159.68 |
Unvested at September 30, 2019 | 76,985 |  |  | $ | 172.08 |
Dividend equivalents are paid on certain cash-settled restricted stock awards. Total compensation cost for cash-settled restricted stock is as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Cost of goods sold | $ | 118 |  |  | $ | 381 |  |  | $ | 954 |  |  | $ | 896 |
Selling, general and administrative expenses | 435 |  |  | 1,064 |  |  | 3,132 |  |  | 2,776 |
Total expense before income taxes | 553 |  |  | 1,445 |  |  | 4,086 |  |  | 3,672 |
Income tax benefit | (67 | ) |  | (158 | ) |  | (413 | ) |  | (368 | )
Total expense after income taxes | $ | 486 |  |  | $ | 1,287 |  |  | $ | 3,673 |  |  | $ | 3,304 |
Performance Share Units Weighted average performance share unit fair values and assumptions for the period specified are disclosed below. The performance share units are market condition awards and have been assessed at fair value on the date of grant using a Monte Carlo simulation model.
| Nine Months Ended September 30,
| 2019 |  | 2018
Weighted average fair value of grants | $207.26 |  | $216.59
Dividend yield | —% |  | —%
Volatility | 19.11% |  | 17.42%
Risk-free interest rate | 2.49% |  | 2.40%
Expected life (in years) | 2.83 |  | 2.85
A summary of the Company’s performance share unit activity as of September 30, 2019 and changes during the nine months ended September 30, 2019 are presented in the following table:
Performance Share Units | Shares |  | Weighted-Average Grant Date Fair Value
Unvested at January 1, 2019 | 111,155 |  |  | $ | 142.42 |
Granted | 56,860 |  |  | 207.26 |
Vested | — |  |  | — |
Forfeited | (12,895 | ) |  | 125.03 |
Unvested at September 30, 2019 | 155,120 |  |  | $ | 178.97 |
On December 31, 2018, 69,995 performance share units vested. Based on the Company’s relative total shareholder return rank during the three year period ended December 31, 2018, the Company achieved a 250% payout factor and issued 174,994 common shares in February 2019. Total compensation cost for performance share units is as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Cost of goods sold | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Selling, general and administrative expenses | 2,359 |  |  | 2,118 |  |  | 5,904 |  |  | 5,949 |
Total expense before income taxes | 2,359 |  |  | 2,118 |  |  | 5,904 |  |  | 5,949 |
Income tax benefit | (196 | ) |  | (418 | ) |  | (447 | ) |  | (1,123 | )
Total expense after income taxes | $ | 2,163 |  |  | $ | 1,700 |  |  | $ | 5,457 |  |  | $ | 4,826 |
The Company’s policy is to recognize compensation cost on a straight-line basis, assuming forfeitures, over the requisite service period for the entire award. Classification of stock compensation cost within the Condensed Consolidated Statements of Operations is consistent with classification of cash compensation for the same employees. As of September 30, 2019, there was $15.2 million of total unrecognized compensation cost related to stock options that is expected to be recognized over a weighted-average period of 1.4 years, $6.2 million of total unrecognized compensation cost related to restricted stock that is expected to be recognized over a weighted-average period of 1.1 years, $4.3 million of total unrecognized compensation cost related to cash-settled restricted shares that is expected to be recognized over a weighted-average period of 1.0 years and $10.8 million of total unrecognized compensation cost related to performance share units that is expected to be recognized over a weighted-average period of 1.0 years.

X
- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration